JEFMS Journal

ABSTRACT:

This study examined the predictors of profitability in Nigeria Insurance Industry between 2011 and 2020. It looked into the effect of financial leverage, solvency margin, financial liquidity and risk underwriting on Profitability of insurance industry in Nigeria. In the study, descriptive research design was employed with the population of thirteen (N=13) composite insurers from which a sample of six (n=6) were randomly selected. Four hypotheses were tested using e-view. Findings showed that SOVEREIGN TRUST plc has the highest ROE with mean value of 0.058489 followed by LEADWAY Insurance Plc with 0.043822 mean value on ROE. Mutual Benefit plc covers 0.038811 and PRESTIGE insurance has ROE of 0.028478. LASACO Assurance Plc with 0.025744 while Cornerstone plc has the lowest mean value on ROE: 0.0112 in the distribution. Thus it is evident that SOVEREIGN TRUST plc and LEADWAY Insurance Plc are the leaders in the Nigerian Insurance industry for the period, with positive effect of financial leverage, solvency margin, financial liquidity and risk underwriting on profitability of the insurance companies in Nigeria. The study therefore concluded that there is statistically significant relationship between the four independent variables (financial liquidity, solvency margin, risk underwriting and financial leverage) on the dependent variable , profitability, proxied by return on equity of insurance companies in Nigeria. The study recommended that stakeholders in the Nigerian insurance industry in collaboration with their regulatory body; National Insurance Commission (NAICOM), should maximize the contributions of the various predictors of profitability in the composite insurance industry across the nation.

KEYWORDS:

Profitability, financial leverage, solvency margin, financial liquidity risk underwriting

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